The energy shockwave quietly sweeps across Asia, and Asian central banks may be forced to shift to a hawkish stance

The Middle East conflict continues to escalate, oil prices have returned to the $100 mark, and the monetary policy pressures faced by central banks in Asian countries are suddenly intensifying. JP Morgan economists pointed out in a report that fiscal policy may be the first line of defense for countries in responding to energy shocks. If oil prices remain high, it could drive central banks across Asia to adopt a hawkish stance. In a scenario where energy costs push up consumer prices, the likelihood of Singapore and Malaysia tightening policies is increasing, while the probability of interest rate cuts in Indonesia and the Philippines is correspondingly decreasing. International oil prices once again broke through $100 per barrel on Thursday, and the International Energy Agency's plan to release strategic reserves failed to effectively quell market concerns about supply disruptions. Goldman Sachs has pushed back its expectations for Federal Reserve interest rate cuts from June and September to September and December, citing that high oil prices have raised the recent inflation outlook, reducing the likelihood of early easing. For Asia, which is heavily reliant on Middle Eastern energy, the inflationary effects of this shock could be particularly significant. Pressure Varies Among Central Banks from Japan to Australia This round of Middle East conflict was ignited on February 28 due to the U.S. and Israel's attacks on Iran, continuously disrupting global oil supply and weakening capacity. The impact on central banks varies significantly due to their different circumstances. For the Reserve Bank of India, JP Morgan stated that as inflation risks accumulate, the bank may maintain interest rates unchanged for a longer period. The situation for the Bank of Japan is relatively unique. Capital Economics analyst Marcel Thieliant pointed out that the surge in energy costs has actually helped the Bank of Japan avoid an awkward situation—previously, it was quite challenging to justify further rate hikes when overall inflation was below the 2% target, while rising oil prices have provided some support. He stated that as long as crude oil prices do not rise significantly further, inflation is unlikely to reach levels that the Bank of Japan would find intolerable. However, Thieliant also warned that Japan relies on the Middle East for 95% of its crude oil imports, and the risk of energy supply disruptions cannot be ignored. The Bank of Japan will remain highly vigilant regarding the economic impacts of the conflict. In Australia, Moody's analyst Sunny Kim Nguyen indicated that the likelihood of another 25 basis point rate hike this month is increasing, as the Middle East conflict has intensified the urgency for action. She wrote in a report that the rationale for tightening policy was already valid before the conflict erupted, and the threat of oil price shocks now brings new inflation risks. Currently, there remains considerable uncertainty about how long this round of turmoil will last, but some analysts have begun to lower their expectations for monetary easing. As the conflict drags on, the probability of central banks in Asia shifting to a hawkish stance continues to rise over time